You Want To Pay Me What? How Lowering Your Rates Can Hurt Your Business

I am staunchly opposed to lowering your rates in order to get work from a client who is not willing to pay your going rate. It never ends well and can actually do a lot to damage your business and future potential.

Here is my reasoning on why you should avoid all rate negotiation that results in you taking on work for less than you would normally charge. Please keep in mind that my argument is based on the assumption that you have the skills and level of expertise to justify the rate you are charging.

Consistently undercharging and trying to beat the competition is a business-killer.

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Once you compromise your rate in order to win work, the client will expect you to charge similarly for all future work. And if you do this with several clients, you will effectively lower your worth and hurt your potential for ever making what you should be making. Once you’re there, it can be a very difficult situation to get yourself out of. Plus, there is always someone who charges less, so you may as well just work for free.
You may not be inspired to give 100%, thus hurting yourself.

If you’re getting paid less by client A to do the same work that client B is paying your full rate for, whose work will you do first? And if your time is limited, which work will you spend more time on? While this may make some sense, the bottom line is that doing any work that doesn’t show your best work only hurts your reputation.

You may wind up with feelings of resentment and dissatisfaction.

If you’ve ever taken on work for a reduced rate and then, in turn, had to deal with an especially difficult client, you probably know exactly what I mean. When you’re getting paid less than you deserve, every normal blip in the client relationship will feel like a huge deal. You may find that you have to make more compromises, either for the client or on your own business policies. Over time, you will really start to dislike the work, the client and everything involved in the situation. It’s not a good way to live.

You’ll attract the wrong type of clients.

When you compromise your rates, it hurts your confidence in yourself and your business. Eventually, you’ll attract clients who only want to pay a reduced rate, don’t understand the value of what you do, and are looking for the cheapest bargain out there. Take time to set your rates, because if they’re true to what you’re bringing to the table, you will be more confident and willing to turn down work that doesn’t support that.

While I think you should never take on work for less than you would normally charge, you should keep in mind that this doesn’t mean you shouldn’t negotiate at all with your clients. Negotiation can have a number of favorable results if you’re negotiating terms you’re willing to be flexible on. For example, you may negotiate on how and when you will be paid, terms of the project, and timing and deliverables of the work. In some cases, you may even negotiate to get the client to pay you what you deserve to be paid.

But wait, there’s always an exception…

I also think it’s important to clarify one situation when being flexible with your rates might make sense.

If you are new to the industry and/or working on your own, there is a certain amount of trial and error that goes into setting your rates. You simply may not know what the market can bear, what your time and skill is worth, and how much you will need to charge to reach a level of financial security. Plus, if you’re just starting out, you may consider the value of building a strong portfolio and base of experience more powerful than the money you actually make on some work.

But if this doesn’t apply to you, you shouldn’t be compromising your rates in order to get more work. If you are doing that consistently, maybe it’s time to revisit what you charge and consider lowering your rates to a more acceptable level, or to find a new pool of (better) clients.

I’m sure there are many out there who disagree, and I’d love to hear why. Why are you flexible with your rates? What benefit does it give you?

If you’re with me in the no-compromising camp when it comes to rates, what impact has it had on your business?